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Irish Remedies Regulations Withstand Constitutional Law Challenge

This Constitutional law challenge relates to an application to lift the automatic suspension under the Remedies Regulations which was heard before Mr. Justice Twomey in July of this year.

Background Facts

Beckman Coulter Diagnostics Limited (“Beckman”) is the incumbent service provider of a blood science laboratory at Beaumont Hospital. Beaumont Hospital ran a tender process for the award of a new contract which was awarded to Roche Diagnostics Limited (“Roche”). On 15 June 2017 Beckman challenged the award of the new contract to Roche (on the basis that there were undisclosed award criteria) thereby triggering the automatic suspension of the contract award. Pursuant to Regulation 8A of the Remedies Regulations, Beaumont Hospital brought an application to lift the automatic suspension. Beckman in turn brought an application to stay the operation of Regulation 8A of the Remedies Regulations on the basis that Regulation 8A is unconstitutional.

Regulation 8A and the Constitutional Argument

Regulation 8A was introduced by the European Communities (Public Authorities’ Contracts) (Review Procedures) (Amendment) Regulations 2015 (S.I 192 of 2015). The main purpose of these Regulations was to provide jurisdiction for a contracting authority to apply to lift the automatic suspension thereby reversing the decision of the Supreme Court in OCS One Complete Solutions Ltd. v. Dublin Airport Authority [2015] IESC 6 in its interpretation of the 2010 Irish Remedies Regulations (S.I 130 of 2010). In the OCS case, the Supreme Court found that the 2010 Irish Remedies Regulations did not confer on the Court a jurisdiction to entertain an application by a contracting entity to lift the automatic suspension prior to the determination of the substantive proceedings.

The constitutional argument raised by Beckman was grounded on a claim that a right to lift the automatic suspension of an awarded contract (as facilitated by Regulation 8A of the Remedies Regulations) is not required by the underlying EU Remedies Directive (Council Directive 89/665/EEC 1 of 21 December 1989, as amended by Directive 2007/66/EC 2 of the European Parliament and of the Council of 11 December 2007). For this reason, Beckman argued that any right to lift the automatic suspension cannot be brought into Irish law by statutory instrument but must be done by an act of the Oireachtas.

Court findings on the Constitutional Argument

Mr Justice Twomey rejected Beckman’s application for a stay on three grounds. Firstly, it was noted that a stay should only be granted at an interlocutory hearing where the evidence in its favour is “overwhelming” which was found not to be the case here. Secondly, it was found that no stay should be granted on the basis that damages would be an adequate remedy pending the hearing of the constitutional challenge and thirdly, the Court indicated that significant weight needed to be attached to the prima facie validity of the statutory instrument and this the court stated further supported the rejection of Beckman’s application.

The Application to Lift the Automatic Suspension

On the application to lift the automatic suspension, Twomey J also found in favour of Beaumont Hospital and ordered that the automatic suspension could be lifted thereby enabling the Hospital to sign the relevant contract with Roche. In arriving at this decision, the Court followed Powerteam v ESB [2016] IEHC 87 which approached the application to lift the suspension on the basis that the applicant for review is applying for an injunction which should be determined by reference to the Campus Oil principles.

Applying the first limb of the Campus Oil test, the Court assumed that there was a fair issue to be tried. Next, the Court considered whether damages would be an adequate remedy for Beckman if they were to win at the substantive hearing, after failing to prevent the Hospital from signing the contract with Roche. Twomey J relied on the sworn evidence provided by Beckman which emphasised the significance of the contract at issue for Beckman. Twomey J noted that this evidence “simply emphasises that the loss caused to it by this Court allowing the Hospital to sign a contract with Roche is financial”. The choice of wording used by Beckman to portray the effect of an award of damages attracted particular attention by Twomey J who noted that Beckman’s evidence referred to damages being “unlikey to compensate” rather than “could not, or will not, compensate it”. Twomey J contrasted this evidence with that provided by the Hospital which indicated that patients would suffer if the contract with Roche was delayed. In this context, the Court found that any negative effect on patients arising from the delay in signing the contract with Roche, is not something for which damages are an adequate remedy.

As regards, the balance of convenience, the Court found that in a situation like this where sworn evidence has been provided that a delay in signing the contract with Roche puts patient outcomes at risk, the balance of convenience supports the lifting of the suspension.

Commentary

This case confirms that any application to lift an automatic suspension heard before an Irish Court will most likely be determined by applying the Campus Oil test. The case also highlights the difficulty facing applicants who allege that damages are not an adequate remedy to compensate for lost profits and/or wasted tender costs and/or reputational losses. Justice Twomey’s findings on the adequacy of damages argument follows the same line taken in BAM Infrastructure v National Treasury Management Agency [2015] IEHC 756 and Powerteam v ESB which set a high bar for applicants seeking to make a case that damages would not be an adequate remedy. The case also reinforces the significance placed on the public interest by Irish Courts when considering the balance of convenience.

Compare jurisdictions: Litigation: Enforcement of Foreign Judgments

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